Opinion
CIV. NO. 3:95-CV-3072-R.
Filed March 31, 2000.
MEMORANDUM OPINION AND ORDER
On November 16, 1998, Plaintiffs Nations Personnel of Texas, Inc. ("Nations") and Nations Personnel of Texas, Inc., Employee Benefit Plan ("Plan") filed their Motion to Vacate Arbitration Award. On June 7, 1999, Plaintiffs filed a motion for leave to file a supplemental brief in support of their motion to vacate the arbitration award. This court granted the motion for leave by an order filed June 16, 1999. On that same day, a supplemental brief in support of the motion was filed by Plaintiffs. Now before this Court is Plaintiffs' Motion to Vacate Arbitration Award, filed November 16, 1999. For the reasons set forth below, that motion is DENIED.
Plaintiffs' brief, and supplemental brief, in support of their Motion to Vacate Arbitration Award are also before the Court.
BACKGROUND
Plaintiffs, Nations and Plan, filed suit in the 101st District Court, Dallas County, Texas, against Defendants American Medical Security ("AMS") and United Wisconsin Insurance Co. ("United"). Plaintiffs claimed, all under state law, breach of contract, violations of the Texas Deceptive Trade Practices Act-Consumer Protection Act and the Texas Insurance Code, negligence, and gross negligence. On December 14, 1995, Defendants removed the case to this Court claiming that the state causes of action were preempted by the Employee Retirement Income Security Act of 1974 ("ERISA"). Plaintiffs moved to remand the case on January 16, 1996. On that same day, Defendants filed their Motion to Stay Proceedings Pending Submission of Controversy to Binding Arbitration. On January 18, 1996, this Court referred both motions to United States Magistrate Judge Jeff Kaplan for recommendation or determination. On March 1, 1996, a hearing was held before Judge Kaplan covering both motions. Thereafter, on September 18, 1996, Judge Kaplan denied Plaintiffs' Motion to Remand and recommended that Defendants' Motion to Stay Proceedings Pending Arbitration be granted. On March 12, 1997, this Court denied Plaintiffs' Objections to Judge Kaplan's Memorandum Opinion and Order, regarding Plaintiffs' Motion to Remand, and Findings and Recommendations, regarding Defendants' Motion to Stay. On April 7, 1997, Plaintiffs filed their Motion for Leave to Amend Interlocutory Order and to File Interlocutory Appeal to the Fifth Circuit Court of Appeals. This Court referred that motion to Judge Kaplan. On April 15, 1997, this Court adopted Judge Kaplan's Findings, Conclusions, and Recommendation and denied Plaintiffs' motion. Based upon Judge Kaplan's finding that the binding arbitration clause controlled, the case was sent to arbitration. On August 18, 1998, the award of Arbitrators was issued, awarding Plaintiffs' the sum of $281,912.67.
Defendants claimed that the binding arbitration clause contained within their contract precluded this litigation.
Memorandum Opinion and Order filed September 18, 1996.
Findings and Recommendation of the United States Magistrate Judge filed September 18, 1996.
The order was filed April 8, 1997.
The recommendation was filed April 9, 1997.
DISCUSSION
I. NATIONS' ORIGINAL ARGUMENTS TO VACATE ARBITRATION AWARD
In sum, Plaintiffs claim that this Court was without jurisdiction to issue the order that sent this case into binding arbitration because ERISA does not preempt their state law claims. However, Judge Kaplan has previously heard these arguments in Plaintiffs' Motion to Remand. That motion was denied after Judge Kaplan found that Plaintiffs' state law claims were preempted by ERISA. (See Memorandum Opinion and Order (filed September 18, 1996).) Indeed, this Court agreed with Judge Kaplan when Plaintiffs' Objections were denied by an order filed March 12, 1997. Thus, under the law of this case, Plaintiffs' state law claims are preempted by ERISA.
In order to circumvent this Court's earlier holding, Plaintiffs now argue that two new Supreme Court cases changed the framework of the ERISA preemption analysis. Plaintiffs cite De Buono v. NYSA-ILA Medical and Clinical Services Fund, 520 U.S. 806 (1997), and New York State Conference of Blue Shield Plans v. Travelers Ins. Co., 514 U.S. 645 (1995). However, De Buono does not create the new ERISA framework argued by Plaintiffs; it merely reiterates Travelers' rejection of the strictly literal reading of ERISA's § 514(a). See, e.g., De Buono, 520 U.S. at 812-13. Throughout the De Buono opinion, Travelers' is cited as the precedent for the ERISA analytical framework. See generally id. at 812-16. Indeed, if there is a new ERISA analytical framework, it was created in Travelers, not De Buono. However, this "new ERISA analysis" was opined more than a year prior to Judge Kaplan's Memorandum Opinion and Order holding that Plaintiffs' claims were preempted by ERISA. It is assumed that Plaintiffs' counsel argued, as well as Judge Kaplan considered, the then existing ERISA preemption law, which included the framework of Travelers. Thus, Plaintiffs motion is denied with respect to its reliance on Travelers and De Buono.
There may be disagreement as to whether Travelers changed the analysis or merely concluded that ERISA's "relates to" language was not intended to change the starting presumption that "`Congress does not intend to supplant state law.'" See Travelers, 520 U.S. at 813.
Travelers was decided April 26, 1995, while Judge Kaplan's Opinion and Order was not filed until September 18, 1996. Additionally, the hearing was held on March 1, 1996.
II. NATIONS' SUPPLEMENTAL ARGUMENT
In their supplemental brief, Plaintiffs argue, yet again, that a new Supreme Court decision warrants this Court's review of its previous decision, finding preemption as to all of their state law claims. This time, Plaintiffs cite UNUM Life Insurance Co. v. Ward, 526 U.S. 358 (1999), asserting that their Article 21.21 claim under the Texas Insurance Code and breach of good faith and fair dealing claim are saved from ERISA preemption.
UNUM concerned ERISA's § 514(b)(2)(A) savings clause, which exempts "`any law of any State which regulates insurance'" from preemption. Id. at 363. However, the Supreme Court in UNUM only reiterated its prior precedent. See id. at 367. Indeed, the Supreme Court stated, "Our precedent provides a framework for resolving whether a state law `regulates insurance' within the meaning of the savings clause." Id. In fact UNUM did not create any new law for interpreting the "regulate insurance" savings clause, but rather cited existing law. See id. at 367-8. Specifically, the Court cited Metropolitan Life Ins. Co. v. Massachusetts, 471 U.S. 724, 740 (1985), as creating the framework that Plaintiffs now contend clarifies the term "regulate insurance." See UNUM, 526 U.S. at 367-8. Thus, the law advanced in Plaintiffs' Supplemental Brief was in existence for over ten years prior to Judge Kaplan's ERISA preemption ruling in this case. Therefore, this Court declines to revisit a prior decision in this case based on law that Plaintiffs are assumed to have argued and Judge Kaplan is assumed to have considered at the oral hearing.
Contrary to the implication of Plaintiffs' argument, UNUM did not create the "common-sense view of the matter" doctrine found in the first question of the regulate insurance analytical framework; instead, UNUM quotes Metropolitan for this doctrine.See UNUM, 526 U.S. at 367.
Metropolitan was decided June 3, 1985, while Judge Kaplan's Opinion and Order was not filed until September 18, 1996.
The oral hearing was held before Judge Kaplan on March 1, 1996.
CONCLUSION
For the reasons stated above, Plaintiffs' Motion to Vacate Arbitration Award is, hereby, DENIED.It is so ORDERED.